How much is earned on short-term rental? 17.07.2019

The short-term rental market and the hotel market are constantly growing - according to estimates by Emmerson Evaluation, by the end of 2019 the number of rooms in Poland will increase by 30% compared to the base available at the end of 2016, and in some regions this increase will be at the level of even 50%.

What does this mean in practice? Investing in real estate is undoubtedly still profitable.

Based on the results described in "Report 2018: Hotel Market in Poland" weekend tourism is becoming more and more popular in Poland, which is a great opportunity for owners of real estate for renting a day. Among those who decide on this kind of trips, 44% are those who want to discover new things, 28% learn about cities, 25% look for peace and respite, while for 23% it is important to spend time with children and an option to visit the place historic values. Bearing in mind these expectations, the most popular weekend tourists enjoy the Tri-City, Warsaw, Wroclaw, Krakow and Torun. The purpose of the trip decides which of them occupies the first three places in the ranking. In the case of monuments, Krakow and Wroclaw enjoy the greatest interest. In terms of gastronomic offer, Krakow and Tri-City. Among the locations rich in attractions for the youngest, the Tri-City is the leader.

For each of these groups, the option to rent an apartment instead of a hotel room means more comfort and freedom of stay. In turn, in the case of family trips, the access to a washing machine or a fully equipped kitchenette will be invaluable. This, however, provides wide possibilities for apartment owners for short-term rental.

How much is earned on short-term rental?

Although the amount of income or occupancy rate depends on many factors, thanks to the support of a professional manager, the owner of an apartment can count on annual revenues of up to 60-65 thousand. PLN, depending on, among others from the location of the property and its finishing standard. However, bearing in mind the average occupancy of all apartments we manage as RentPlanet, it amounted to 75% last year. For comparison, according to the results of the STR report, in the same period for hotels in Warsaw it amounted to 75.3%. This clearly shows how the huge potential lies in short-term rental. This is also confirmed by the Property Index Report, Overview of European Residential Markets by the consulting company Deloitte. It shows that in Poland, 15.3% of all premises are those that are intended for rent.

As in RentPlanet, we estimate the rate of return and occupancy?

In cooperation with our clients, we rely on forecasts created based on the experience of the Revenue Management department as well as historical data and market reports. Forecasts include the occupancy assumed in individual years and the expected annual rate of return, which usually oscillates around the level of 6-8%. However, it should be emphasized that for each apartment we develop a dedicated pricing policy. It is created on the basis of a market analysis, including competitive offers of apartments for rent and hotels. However, above all, we rely on the knowledge of our experienced Revenue Management team. We use both public and proprietary tools, which thanks to special algorithms monitor in a 24/7 mode nearly 150 variables, including, among others. weather, events in a given location, etc. Based on the current analysis, we make decisions about lowering or increasing the price of accommodation in a given apartment, so that it generates the maximum income. In this way, the prices of a particular apartment can change even 4 times a day.

"Revenue Management is a method of work often referred to as a strategy of action, the aim of which is to optimize the sales process in order to generate the highest possible income. For this purpose, it is forecasted, among others demand for specific services among potential consumers, which allows companies to manage the price and margin, as well as direct the offer to specifically profiled groups at the right time."

Such an action policy is aimed at developing reliable and reliable forecasts, satisfying both property owners and RentPlanet. Confirmation of the effectiveness of this method of action is, among others average annual occupancy in the apartments we manage. In 2018, it amounted to almost 84% in Wroclaw, 70% in Zakopane, and 69% in Szklarska Poreba.

Importantly, the above-mentioned occupancy rate was worked out at a price for an overnight stay of over PLN 230 in Wroclaw, over PLN 220 in Zakopane and nearly PLN 200 in Szklarska Poreba. Statistic is a few percent more than the average cost of accommodation in these locations, so that in the last year our clients achieved a noticeably higher income.

How does RentPlanet ensure occupancy in managed apartments?

All apartments located in our database are promoted in a similar way, using the same tools, ensuring satisfaction and high revenues of all owners who work with us. However, it should be borne in mind that regardless of the manager's efforts, the final choice decision is always on the side of the guests.

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